Cryptocurrencies can typically be bought on, sold on, or traded on cryptocurrency exchanges or brokerages. However, most of the time, these brokerages will have a hot wallet option, which is essentially a cryptocurrency wallet that stores the asset on the exchange or brokerage itself, which means that it will always be connected to the internet.
If you are curious as to exactly how to store Ethereum offline, we will take you on a step-by-step guide in doing so, but first, let’s go over why you might want to do so as we discuss the differences between a cryptocurrency hot wallet and a cold wallet.
How to store Ethereum offline: A Hot Wallet vs. A Cold Wallet
A hot cryptocurrency wallet is categorized as any wallet that has a direct connection to the internet. In other words, this will typically be the cryptocurrency wallet that you end up finding within online brokerages and exchanges, which is given to you the moment you decide to create an account.
Additionally, there are also private cryptocurrency wallet applications where you as a user end up having full control over your private keys. However, they are still always connected to the internet.
This, in turn, has a risk associated with it, as these wallets could potentially be remotely compromised or hacked by bad actors or hackers and be susceptible to phishing attacks.
On the other hand, cold wallet storage devices are essentially wallets that, once cryptocurrencies have been successfully transferred to them, will typically disconnect from the internet. This is why they are referred to as cold storage, as they have no direct access to the internet, up until the point in time where you might want to transfer the crypto to a hot wallet again as a means of exchanging it, trading it, or selling it online through a brokerage or an exchange.
These provide users with the highest level of security, and as such, is the main reason why they have such a high point of appeal among many holders of cryptocurrency assets. The fact is that if you are going to be buying Ethereum (ETH) and holding onto it for months or even years, then your best option would be to keep them offline in a cold storage wallet device.
- Pick a Cold Storage Wallet Device
The first thing that you will need to do in order to store Ethereum offline is to pick a proper cold storage wallet device. Keep in mind that there are plenty of cold wallet devices out there that fully support Ethereum (ETH) cryptocurrency tokens.
However, you will need to find an option that’s truly trustworthy as a means of preventing the loss of your funds. Some of the industry-leading cold-wallet storage devices have been developed by Ledger and Trezor as the main two competing brands within this industry.
However, there are many alternatives out there as well. Do your research and pick a wallet that suits your specific needs best and one that you trust the most. Learn how to get an ethereum wallet address here.
- Transferring Ethereum (ETH)
After you have selected the Ethereum cold storage device that you want to use, the next step is to add your ETH cryptocurrency balance to it. Typically, you might have purchased your cryptocurrency balance (ETH) token through the usage of a cryptocurrency exchange or a cryptocurrency brokerage. You can always find the best platform for trading Ethereum.
If this is the case, then you will need to transfer the ETH tokens from the wallet address found within your hot wallet to the wallet address of the cold storage device. Make sure that you understand how to transfer Ethereum tokens.
You will typically need to use a USB cable in order to connect the cold storage device to your computer and enter the pin code you have set up throughout the initial setup process. Then, you will need to enable Browser Support on that storage device, assuming it has that requirement.
On the exchange you are using, click on Send ETH or Tokens as an option, pick your wallet, enter your wallet address, and confirm and validate any of the pop-ups that you might get prompted to confirm. Typically, this will involve the process of you having to “unlock your wallet,” and once all of that is completed, you will just enter the address you would like to interact with and send your tokens there.
- Disconnecting the Device
Once you are 100% sure and have seen confirmation that the cryptocurrency has been transferred to your offline cold storage device, then all that’s left for you to do is disconnect the USB cable, after which the wallet will be fully offline. In other words, nobody will be able to access your crypto remotely ever, and the only odds of theft can occur if someone physically seals the device and has your pin code. In any case,
it is far more secure and quite possibly the most secure way through which any user can store their Ethereum (ETH) tokens. Furthermore, even if a cold storage wallet gets lost, there are ways through which you can recover your ETH balance.
Knowing When to Withdraw
Typically, once you transfer your cryptocurrency to a cold storage device, you will essentially have these tokens offline until the moment in time that you decide to put them to a hot wallet once again. What this essentially means is that if you want the highest level of security, you will only have to withdraw the tokens at a point in time when you have the genuine desire of spending them, trading them or selling them. This is an essential part of the storage process, as it will help you maintain the highest level of security in regard to your tokens.